Mozilla has published its audited financial statements from 2008. The …

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Mozilla has published its audited financial statements from 2008, reporting $78.6 million in revenue for the fiscal year—a five percent increase from 2007. Aside from a weakened investment portfolio, the browser maker has not been hit hard by the economic recession.

Mozilla's organizational structure and governance model are a bit unusual. The Mozilla Corporation is a wholly-owned subsidiary of the non-profit Mozilla Foundation. The corporation, which is taxable, serves as a vehicle for managing the organization's business relationships. The foundation, which has tax-exempt status, holds the organization's intellectual property and directs its policies and mission.

Most of Mozilla's revenue is generated through search deals with Google and other popular website operators. Mozilla receives a kickback for integrating search services from these companies into the Firefox Web browser. Mozilla also generates revenue from investments and donations that are made by individuals to the foundation.

This revenue allows Mozilla to pay its staff of roughly 200 people and also covers operational overhead such as the expense of Mozilla's offices, equipment, and technical infrastructure. Total expenses for 2008 added up to $49.4 million, including roughly $31.2 million on software development, $6.2 million on branding and marketing, and $9.8 million on general and administrative costs. Mozilla also spent about $1 million in grants and financial contributions to external organizations, including $100,000 to fund development of the open Ogg Theora media codec.

Mozilla's total assets at the end of 2008 were $116 million, a 17 percent increase from the previous year. This includes the $22 million that Mozilla set aside in a tax reserve fund in 2005 pending the outcome of an ongoing IRS investigation of Mozilla's tax status for 2004 and 2005. There is some question as to whether the Mozilla Foundation should continue to be classified as a public charity or be reclassified as a private foundation. The IRS is still evaluating the matter.

Mozilla chairperson Mitchell Baker posted a blog entry last week with a summary of Mozilla's financial statements from 2008 and a retrospective overview of the organization's major accomplishments and new initiatives for that year.

"2008 was another exciting and robust year for Mozilla," she wrote. "Our scope of activities continued to grow, our community of committed contributors and users expanded, our geographical diversity deepened, and our effect on increasing openness, participation, innovation and individual empowerment in Internet life is significant."

Some view the emergence of Google's Chrome Web browser as a potential risk to Mozilla's long-term sustainability, because the organization depends heavily on revenue from the search giant to fund its operations. There is no immediate risk, however, as Google recently committed to extending its contract with Mozilla to 2011. Although Google's browser is gaining traction, the search giant still has plenty of incentive to pay for privileged placement in Firefox, which has considerably higher marketshare. According to Baker, the competition is a win for the open Web.

"Competition, while uncomfortable, has benefited Mozilla, pushing us to work harder," she remarked. "Mozilla and Firefox continue to prosper, and to reflect our core values. We expect these competitive trends to continue, benefiting the entire Web."

Mozilla has come a long way since its initial inception in 1998. But despite bringing in tens of millions of dollars in revenue every year, the organization remains strongly committed to its core values rather than the pursuit of profit.